Gateway slashes its workforce

The troubled computer maker Gateway is to shed up to 4,600 staff, or a quarter of its global workforce, and close key operations outside of the US.

In a radical restructuring, Gateway is to close its arms in Malaysia, Singapore, Japan, Australia and New Zealand in order to focus on its core business in the US.

We are planning to win by building a lean, nimble organisation that is focused on our customer base

Ted Waitt
Gateway chief

And the firm will decide within the next 30 days whether to ditch its European operations as well.

A spokeswoman for Gateway said that with the possible closure of its European operations, the job cuts would total about 4,600 out of a worldwide workforce of about 19,000.

Gateway racked up losses of $9m in the second quarter of the year as sales around the world dwindled.

The firm has suffered from weak demand and an intense price war with its rivals such as Compaq and Dell.

Soothing investors

The US has not escaped the redundancies, with the firm cutting 15% of its US workforce and closing call centres in four states and a US manufacturing plant in Utah.

"We are doing all the right things to create a new company with a unique competitive edge and a healthy, profitable future," said Gateway chief Ted Waitt, admitting that the decisions had been tough to make.

The restructuring will incur a charge of about $475m in the third quarter of the year, but should then save the company $300m a year.

"We are planning to win by building a lean, nimble organisation that is unified and focused on our customer base," said Mr Waitt.

Shares in Gateway have fallen from a 52-week high of $69.85 to just $8.6 on the New York Stock Exchange on Tuesday.

The shares then rose to $9.22 in after-hours trading as the company soothed nervous investors by saying that there was enough cash for the foreseeable future.